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August 31, 2018
Notwithstanding the mixed economic news, the Chancellor unveiled a number of key measures with the stated aim of bolstering the economy and ‘supporting aspiration’.
With tax receipts lower than expected despite strong economic growth, many had predicted that Chancellor George Osborne would have limited room for manoeuvre when presenting his last Autumn Statement before the 2015 General Election.
UK economic growth forecasts have been revised upwards to 3% for the current year, but the Chancellor conceded that the UK deficit ‘remains too high’ and that further ‘very substantial savings’ in public spending will be required. Revised forecasts from the Office for Budget Responsibility now predict Government borrowing of £91.3 billion this year, compared with its previous forecast of £86.6 billion.
The headline measure was a complete reform of stamp duty on residential property. The existing system will be abolished, with a new set of graduated rates – including a new 12% rate for the most expensive properties – applying with effect from Thursday 4 December.
The Chancellor’s speech also confirmed a package of reforms affecting small and medium-sized businesses, including a £400 million Treasury pledge to extend Government-backed Enterprise Capital Funds, together with plans to back up to £500 million of new bank lending to SMEs under the Enterprise Finance Guarantee. The R&D tax credit will also be increased for SMEs, while employer national insurance contributions (NICs) for young apprentices will be abolished and the Employment Allowance extended to care and support workers.
Meanwhile, the Chancellor answered calls from leading UK business groups to review the business rates system, with some of the more immediate measures including an extension of the doubling of the Small Business Rate Relief by a further year from 1 April 2015 and extending the 2% cap on inflation-linked increases by another year.
Turning to personal taxation, the Chancellor confirmed plans to allow pensioners to take control of their pension pots from April 2015, adding that from this time the 55% ‘death tax’ on the annuities of those who die aged under 75 will also be abolished. The income tax personal allowance for 2015/16 will also see an additional increase, rising to £10,600, and will be accompanied by a corresponding increase in the higher rate threshold to £42,385.
In the run-up to the Autumn Statement, the Chancellor had already pre-announced a package of support for the NHS, UK road and rail infrastructure and flood defence schemes.
Other significant announcements included further anti-avoidance measures, an ongoing fuel duty freeze, and the abolition of Air Passenger Duty for under-12s from 1 May 2015.
For a detailed overview of the Autumn Statement, visit our summary here.
‘On course for lower taxes. On course for more jobs. On course for higher growth. On course for a truly national recovery. A long term economic plan, on course to prosperity’.
Chancellor George Osborne
‘He promised to make people better off. Working people are worse off. He promised we were all in this together when he cut taxes for millionaires. Every target missed, every test failed, every promise broken’.
Shadow Chancellor Ed Balls
‘The statement demonstrated what can be achieved with limited room for manoeuvre by focussing on considered tax reforms. We’re pleased that that the higher rate tax threshold is heading in the right direction’.
Director General of the IOD Simon Walker
‘Today should have seen policies for growth, but the Chancellor has boxed himself in with a rigid and artificial deficit reduction timetable’.
Frances O’Grady, TUC General Secretary
‘International tax rules are in urgent need of updating, but the decision for the UK to go it alone, outside the OECD process, will be a concern for global businesses, and moving the goalposts on offsetting losses risks creating a worrying precedent’.
John Cridland, Director General, Confederation of British Industry
August 31, 2018
August 31, 2018